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Malaysian prosecutors have dropped criminal charges against three Goldman Sachs units accused of misleading investors for more than $ 6.5 billion in bond sales they helped organize for a state fund, state news agency Bernama reported.
Friday’s move comes after the US banking giant agreed to pay $ 3.9 billion to Malaysia to settle an investigation into its alleged role in the scandal involving 1Malaysia Development Berhad (1MDB), the fund that counts the former prime minister. Malay Najib Razak as one of its co-founders.
The United States Department of Justice estimates that $ 4.5 billion of 1MDB was embezzled between 2009 and 2014, including some of the funds that Goldman Sachs helped raise.
The units, based in London, Hong Kong and Singapore, had pleaded not guilty in February and the bank has consistently denied wrongdoing.
“Goldman Sachs International Ltd, Goldman Sachs (Asia) LLC and Goldman Sachs (Singapore) are therefore released, which amounts to an acquittal of all four charges brought against them,” Bernama quoted High Court Judge Mohamed Zaini Mazlan as saying.
Attorneys for Goldman Sachs and the prosecution could not immediately be reached for comment.
As part of its deal with Malaysia, Goldman paid out $ 2.5 billion in cash and guaranteed the return of $ 1.4 billion in 1MDB assets seized around the world.
Goldman Sachs had to increase its legal reserves by $ 2.01 billion to account for the Malaysia deal, cutting its second-quarter net income by 85 percent and eliminating what had been a surprise increase in earnings due to business earnings.
Malaysian prosecutors will also stop pursuing the case against the 17 current and former directors of Goldman Sachs, the Bloomberg news agency reported, citing people familiar with the matter who asked not to be identified because the information is private.
The scandal surrounding 1MDB led to Najib’s impeachment in 2018 and sparked corruption investigations in at least 10 countries, including Singapore and Switzerland. Najib was convicted of corruption last month and sentenced to 12 years in prison in the first trial for the scandal to reach a conclusion. Najib has maintained that he is innocent.
